Tuesday, July 16, 2013

Import Share of China's Exports

I'm putting together my Course Guide for a subject called Power in East Asia and came across this - OECD/WTO TRADE IN VALUE-ADDED (TIVA) DATABASE: CHINA - in my list of new material.

Basically the data shows that Chinese exports include a large amount of foreign content reflecting the fact that China is often at the end of the value chain.

The main findings are:

The bilateral trade surplus with the US is about 25% lower in 2009 in value-added terms. Interestingly, a significant factor behind this is the relatively higher imports of US value-added.

China is well connected to other economies as a hub in "factory Asia": gross exports incorporate a large share of foreign value-added and nearly half of all imported intermediates are used as inputs for exports.

While China is strong in manufacturing industries, the role of services should not be neglected: 30% of Chinese gross exports correspond to value-added from services industries and in sectors such as electronic goods, 30% of the value exported also comes from services.

If trade is measured on a value-added basis the US trade deficit is smaller because:

As a final assembler, China relies on intermediate goods and services that are for a significant share imported from the US or that incorporate value-added from the US. China has also moved upstream in some value chains and exports intermediate inputs used by third countries that export to the US.

In some industries as much as 40 per cent of exports are accounted for by foreign value-added content.

Many of China's imports are then exported. In several industries the share of imported intermediate inputs that are exported is greater than 50 per cent, with the average of all industries just under 50 per cent. Over 80 per cent of textiles and apparel intermediate imports are exported and over 70 per cent of electrical equipment intermediate imports are exported.